The quickening pace of economic development as well as a growing diversity of business models and product ideas all call for a new kind of workforce.

This is part of a new series about global megatrends. Please read the introductory post.

Once upon a time, millions of people got up in the morning to brush their teeth, put on a blue or white collar, and go to work in factories and offices. It was common for an employee to stay with their employers for many years. Most people worked for the same company until they retired. Big companies were a safe haven. The work world was a stable and predictable place.

Not anymore.

RATIONALE

The traditional employment model is falling apart. Instead of a single career with a single company lasting from graduation to retirement, employees are increasingly on the move. For example, the U.S. Bureau of Labor Statistics reports that people born between 1957 and 1964 held, on average, 11 jobs from ages 18 to 44. That’s roughly one new job every 2.4 years. In today’s world, 5 to 7 careers during a lifetime is becoming commonplace.

There are a number of reasons to explain this trend. In a globalized business world that has become addicted to fast technologies and agile business models, companies simply cannot provide lifetime employment anymore. In order to survive, businesses must continuously reinvent themselves to provide competitive products and services. The faithful worker has become the victim of this development, while the caring employer is but a distant memory.

Meanwhile, due to increased legal limitations from strict labor laws, the hiring and firing process is becoming risky and expensive. Global outsourcing of entire business processes to large service providers is one strategy to mitigate this problem; on-demand hiring of individual experts is another.

The good news is that this new situation is frequently a fair deal. While freelancers are easy to hire and to fire, they tend to be better paid than their traditional employee counterparts. They also enjoy the independence and flexibility that come from acting as individual entrepreneurs. While workforce globalization tends to depress local wages, highly-skilled experts can achieve good rates worldwide.

A huge market for freelancers has already developed. According to an Aberdeen Group report, about 26% of the workforce in the United States is contingent or contract based. The contingent workforce has become a worldwide phenomenon and is expected to accelerate.

CONSEQUENCES

Individuals:

A different education profile is required for a freelance career. In addition to hard skills, freelancing requires selling and marketing abilities. Finding new clients is the number one challenge for every freelancer. Remaining visible to potential clients worldwide requires skill as an online marketer, website designer and social network guru. Negotiating skills are also a necessity. All of these abilities must be acquired early on in a freelancer’s career.

To remain highly motivated, working in a field with passion is the only sustainable solution. Thus, education will have to be closely aligned with personal preferences and talents.

Continuous learning will become an important habit. Keeping up with rapidly changing industry trends must be an integral part of media consumption and social networking.

A different mindset is also required to endure the freelancer’s low level of job security. Instead of hoping to land a permanent position, confidence and the entrepreneurial spirit are vital to future success.

Traditional lobbies, consisting of welfare-oriented political parties and unions, will attempt to hinder the growing freelance trend. Bureaucratic rules and complicated tax codes, as well as strict audits and other limitations, will be imposed on freelancers in many countries. These already include “disguised employment” rules. Freelancers must be aware that they may suddenly find themselves in an existence-threatening legislative environment. Adjusting to dramatic changes may even include relocating to a different country.

Businesses:

Innovative companies will have to become project-oriented. Matrix organizations will be vigorously slimmed down. Middle management will suffer most from this change.

Highly effective project management will become a top skill within an organization. The management style will change from corporate culture to a product-focused approach. This means successful organizations will focus on creating crystal-clear product visions instead of trying to maintain a feel-good factor with conventional employee perks and events.

For many projects, teams will consist of a mix of employees and freelancers. Managing these teams will be as important as it is challenging.

Finding the right talent on-demand will be crucial for successful operations. For that reason, the responsibility for hiring freelancers will be shifted from HR to technical teams with the necessary know-how to select the best-fitting team members.

Teams with a high share of freelance professionals are less likely to be collocated. The ability to develop, acquire and implement efficient work distribution and collaboration (both tools and processes) will become essential success factors.

Since freelance experts will not be staying with their clients as long as an employee would, businesses will have to develop new knowledge-management strategies, such as development processes and improved information storage and management.

Due to the high turnover, it will be increasingly difficult to keep trade secrets a secret. Innovative ideas will become a globally available commodity. Thus, the ability to execute projects, especially systems development, with speed and quality will become more important than the ability to invent new products or develop new concepts.

Since freelancers have little time to look for new customers, there will be a growing need for agents who can bring freelancers and their clients together. This is already a quickly growing business model used by agencies and Internet platforms. However, for groups such as high-end experts, new kinds of highly specialized sales and marketing services will develop. These will likely include freelance agents and marketing-oriented professional associations.

CONCLUSIONS

There is little doubt that this global shift to freelancing will continue, radically altering the way we work and how business models operate. Businesses will undoubtedly benefit from this development, but so will be the experts, at least in the long run. While possible side-effects, such as declining job security, may cause social tensions, and though many may mourn the good-old corporate coziness, positive implications likely outweigh potential problems. For example, according to market research, a vast majority of employees are very unhappy with their jobs. Following their real passions, as well as gaining the sense of freedom and self-determination, makes professionals happier with their lives. A freelance-oriented economy is thus likely to produce generally happier societies.

About the Author

Roman Mildner, Certified Project Manager (PMP) and member of the United Mentors Network (UMN), has worked in the IT industry since 1992 and an independent consultant and project manager since 1998. His professional offering includes IT strategy consulting, project management and process improvement. For more details, please visit his UMN page.

Comments (4)

I find the idea that contractors get “a good deal” and “tend to be better paid than their traditional employee counterparts” disingenuous and untrue. The shift towards contractors is not being led by workers, but rather by companies. Why would a company prefer contractors, if they had to pay more for them than for employees?

If you factor in the cost of the benefits that contractors used to enjoy, such as paid vacations, health care, pensions, etc., it is clear that this shift is costing contractors a lot. As a contractor myself, in translation services, I find that my compensation is similar, but my overall costs are much higher than they would be as an employee.

Additionally, companies are increasingly using “jobs boards” where contractors are forced to compete, in order to drive wages down.

My guess is that you haven’t talked to a wide range of contractors to ask how they feel about this.

Skeptical insight is always greatly appreciated. There will always be two sides to every story, and both are interesting.

Allow me to note that after twenty (!) years of working in a freelance environment (both as contractor and partially also “selling” contractors to clients as well as finding and “buying” contractors for them) I believe to have developed at least a general idea of the freelance market. Consequently, during that time I have spoken to a considerable number of freelancers.

There are two issues that I may have insufficiently emphasized in my post:

1. I firmly believe that being an unhappy but safe employee is not more desirable than being an autonomous freelancer, despite various drawbacks. Consider that most (!) employees are unhappy and frustrated with their jobs for a good reason (search the web for surveys on this issue, they are quite insightful).

2. I am aware that there are various types of contractors, especially when it comes to their professions. Some are more homogenous (thus exposed to fierce price competition) and some are more unique (targeting more lucrative niche markets).

I am aware that once in a while employees are forced to become contractors against their will. That makes things different, of course, but it is not a mass phenomenon, at least not in the IT industry which is probably the most interesting and exceptionally fast growing contracting market. In most cases it all seems to boil down to having both the right skill and the right attitude.